FSEC is an intermediate duration fixed income ETF focused on investment-grade MBS securities, with a 5.3-year duration and a 4.34% SEC yield. The fund's performance is highly sensitive to intermediate rates movements, with potential capital gains expected as rates move lower. FSEC's portfolio is predominantly AAA-rated MBS, minimizing credit risk and aligning closely with the iShares 3-7 Year Treasury Bond ETF from a duration standpoint.
Following the Federal Reserve's September interest rate cut, mortgage rates surprisingly have not declined. They've actually increased and that might be one of the reasons why mortgage-backed securities (MBS) have retreated in recent weeks.